Presented below is information taken from a bond investment amortization schedule with related fair values provided. These

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Presented below is information taken from a bond investment amortization schedule with related fair values provided. These bonds are managed to profit from changes in market interest rates.
12/31/19 12/31/20 12/31/21 Amortized cost €491,150 €519,442 Fair value €550,000 497,000 509,000 550,000

Instructions
a. Indicate whether the bonds were purchased at a discount or at a premium.
b. Prepare the adjusting entry to record the bonds at fair value at December 31, 2019. The Fair Value Adjustment account has a debit balance of ‚¬1,000 prior to adjustment.
c. Prepare the adjusting entry to record the bonds at fair value at December 31, 2020.
d. Repeat the requirements for (c), assuming the investments are held under a hold-for-collection and selling strategy.

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Related Book For  book-img-for-question

Intermediate Accounting IFRS

ISBN: 978-1119372936

3rd edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

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